GlobalFoundries is Finally Free of AMD, AMD Takes $278M Charge

GlobalFoundries has announced that today, on their third anniversary, they have reached an agreement with AMD to acquire the remaining share of the company. GlobalFoundries, AMD?s former manufacturing arm of the company, has been spending the past few years slowly trying to gain independence from AMD as a company. While both companies still rely on each other in terms of business partnerships, AMD will no longer have a stake in GlobalFoundries? business decisions and the like.

Being independent for GlobalFoundries is a big deal because it enables them to effectively go after ANY customer, for example NVIDIA. While there are no indications of this being true, it opens these companies up to GlobalFoundries as potential customers now that they are independent. Bear in mind that in the third quarter results, AMD?s new management did announce that the two year window for their departure from GlobalFoundries board started on Oct 1. Less than six months later, AMD completed the process.

With this transaction, they are now wholly owned by ATIC, an investment arm of the Abu Dhabi government, which poured countless billions into GlobalFoundries to help make it a competitive force in the semiconductor manufacturing industry. Some of these investments include the creation of Fab 8 in upstate New York, which produces 300mm wafers and has started to produce silicon for one of their first customers, IBM. Furthermore, the company plans to invest an additional $3B in their Singapore, Germany and New York locations.

Note that this acquisition of shares is part of a revision to the WSA (wafer supply agreement) that was recently negotiated for 2012. The terms of that agreement were not disclosed and it is not known if AMD kept its great "pay per good die" agreement.

As AMD will have to pay 703 million dollars in this transaction, we can say that GlobalFoundries and ATIC did great. AMD will pay $425 million in cash over next two years for the chip manufacturing and take non-cash charge of $278 million, which was the remaining share of GlobalFoundries.